GBP/USD risks a breach of 1.3000 – UOB

FX Strategists at UOB Group suggested a deeper retracement is on the cards in case GBP/USD breaks below the 1.3000 support in the next weeks.

Key Quotes

24-hour view: “Yesterday, we were of the view that ‘further GBP weakness would not be surprising and a break of 1.3000 seems likely’. However, the anticipated weakness did not break 1.3000 as GBP dropped to 1.3001 during late NY hours. While GBP could still edge below 1.3000, waning downward momentum coupled with oversold conditions suggests that a sustained decline is unlikely. The next support at 1.2950 is unlikely to come under threat. Resistance is at 1.3040 followed by 1.3075.”

Next 1-3 weeks: “There is not much to add to our update from yesterday (14 Mar, spot at 1.3045). As highlighted, GBP could breach 1.3000 and if it can close below this support, it is likely to trigger further weakness to 1.2900. Overall, the weak phase in GBP that started more than 2 weeks ago is intact as long as it does not move above 1.3140 (‘strong resistance’ level was at 1.3170 yesterday).”